Cambridge IGCSE Business Studies 0450 — 2004 May/June Paper 1 · Variant 1

This document consists of 12 printed pages. SP (SJF3023) S59271/2 © UCLES 2004 [Turn over UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINATIONS International General Certificate of Secondary Education BUSINESS STUDIES 0450/01 Paper 1 May/June 2004 1 hour 45 minutes Candidates answer on the Question Paper. No Additional Materials are required. READ THESE INSTRUCTIONS FIRST Write your Centre number, candidate number and name on all the work you hand in. Write in dark blue or black pen in the spaces provided on the Question Paper. Do not use staples, paper clips, highlighters, glue or correction fluid. Answer all questions. At the end of the examination, fasten all your work securely together. The number of marks is given in brackets [ ] at the end of each question or part question. The businesses described in this question paper are entirely fictitious. Centre Number Candidate Number Name For Examiner’s Use If you have been given a label, look at the details. If any details are incorrect or missing, please fill in your correct details in the space given at the top of this page. Stick your personal label here, if provided. 1 2 3 4 5 TOTAL www.XtremePapers.com

2 0450/01/M/J/04 1 Classic Computers manufactures computers. Some of its products are in the maturity stage of their product life cycle. The market for computers is very competitive. The management know that sales depend on the right marketing mix decisions. The Marketing Manager believes that the demand for computers is price elastic. Table 1 gives some data about Classic Computers. Table 1 Classic Computers Sales Data 2003 Sales volume (units) 500 Sales revenue ($) 400 000 The total market value of computer sales in 2003 was $2 million. (a) Calculate for Classic Computers: (i) the unit selling price, … … … … [2] (ii) its market share. … … … … [2] (b) (i) Draw and label the stages of a product life cycle. [4] For Examiner’s Use © UCLES 2004

3 0450/01/M/J/04 [Turn over (ii) Explain what is meant by the maturity stage of a product life cycle. … … … … [2] (c) (i) The demand for Classic Computers’ products is price elastic. Do you think that the Marketing Manager should increase the prices of computers? Explain your answer. … … … … … … … … [4] (ii) Explain how two elements of a marketing mix other than price might help the sales of Classic Computers’ products. … … … … … … … … … … … … [6] For Examiner’s Use © UCLES 2004

4 0450/01/M/J/04 2 Anesh Patel’s business makes toys. His business has been successful. However recently sales and profits have been falling. ‘Things seem to be getting worse,’ he said. ‘The government is raising interest rates and introducing new health and safety laws. I may have to make some workers redundant if my costs rise any more. What the government should be doing is keeping out cheap imports.’ (a) (i) Give two examples of health and safety problems that government laws might try to solve. … … … … … … … … [4] (ii) Do you think that governments should introduce health and safety laws? Explain your answer. … … … … … … … … … … … … [6] For Examiner’s Use © UCLES 2004

5 0450/01/M/J/04 [Turn over (b) (i) Why does Anesh believe that the government should keep out cheap imports? … … … … [2] (ii) Explain one method that could be used to protect Anesh’s business from cheap imports. … … … … … … [3] (c) Why might a rise in interest rates affect the profits of Anesh’s business? … … … … … … … … … … [5] For Examiner’s Use © UCLES 2004

6 0450/01/M/J/04 3 Titaya Fabrics is a sole trader business that manufactures a range of clothing. It sells directly to retail shops. Sabina, the owner, is looking at the accounts of the business. A summary of these is given in Table 2. Table 2 Profit/Loss Account ($000’s) Titaya Fabrics for year ending 31 December 2003 Sales 120 Cost of Sales 70 Gross Profit ? Overheads 40 Net Profit 10 (a) Calculate: (i) gross profit, … … [1] (ii) net profit margin. … … … … [2] (b) Explain why profits matter to a business such as Titaya Fabrics. … … … … … … [3] For Examiner’s Use © UCLES 2004

7 0450/01/M/J/04 [Turn over (c) Sabina is planning to change the business into a limited company. Would you advise her to do this? Explain your answer. … … … … … … … … … … … … [6] (d) Sabina was unsure of the meaning and importance of several items found in her accounts. (i) What is meant by a fixed asset? … … … … [2] (ii) Explain why business accounts often include debtors. … … … … [2] For Examiner’s Use © UCLES 2004

8 0450/01/M/J/04 (iii) Identify and explain one ratio other than net profit margin that could be used to judge the financial success of her business. … … … … … … … … [4] For Examiner’s Use © UCLES 2004

9 0450/01/M/J/04 [Turn over 4 Manfred Lorenz manages an insurance office. He is worried about the large number of his staff who have left to work for other companies. He has collected the following information. Table 3 Information about office staff Average Manfred’s company Starting salary $10 000 $11 000 Average salary after 5 years $17 000 $15 000 Average time before first promotion 3 years 5 years Average number of years in job 6 years 2.5 years Average hours worked per week 40 46 (a) Does the information show that Manfred has a problem in keeping his staff? … … … … [2] (b) Explain the possible reasons why Manfred’s staff are leaving their jobs. … … … … … … … … … … … … [6] For Examiner’s Use © UCLES 2004

10 0450/01/M/J/04 (c) Manfred is planning to increase staff salaries. Do you think that this will reduce the problem of staff leaving? Explain your answer. … … … … … … … … … … … … [6] (d) When Manfred recruits new staff they are given induction training. (i) What is meant by induction training? … … … … [2] (ii) How useful is induction training to businesses? … … … … … … … … [4] For Examiner’s Use © UCLES 2004

11 0450/01/M/J/04 [Turn over 5 Balltop plc is an engineering company based in England. It manufactures a range of industrial products. The U.S.A. is its main market. It has been reported in newspapers that the company dumps its industrial waste near to its factory. (a) Which level of business activity best describes Balltop plc: Primary, Secondary or Tertiary? Explain your answer. … … … … [2] (b) How do the objectives of public sector activities often differ from those of the private sector? … … … … … … … … [4] (c) The exchange rate of the £ to the U.S.A. $ is £1 = $1.5. (i) If a Balltop plc product is priced at £200 what price would you expect it to sell for in the U.S.A.? Show your calculations. … … … … [2] For Examiner’s Use © UCLES 2004

12 0450/01/M/J/04 (ii) If the exchange rate of the £ rose against the $, would this help Balltop plc’s exports to the U.S.A.? Explain your answer. … … … … … … [3] (d) Pressure groups, such as Greenpeace, are a group of people who feel strongly about issues. (i) How might a pressure group attempt to get a company like Balltop plc to change some of its policies? … … … … … … … … [4] (ii) Many people believe that it is the role of governments to pass laws to stop firms damaging the environment. Do you agree? … … … … … … … … … … [5] For Examiner’s Use © UCLES 2004 University of Cambridge International Examinations is part of the University of Cambridge Local Examinations Syndicate (UCLES) which is itself a department of the University of Cambridge.